Is the New Nil Rate Band as Beneficial as it is Made Out to Be?
The recent ’increase’ to the Nil Rate Band for Inheritance Tax has caused a lot of chatter amongst practitioners and academics. How beneficial will it really be?
We at Pindoria Solicitors are finding that a lot of people are not fully aware of the circumstances under which the new exemption will work and have misconceived the increase as being a blanket £500,000 for each and every person.
The initial Nil Rate Band threshold of £325,000 will remain as it is. The increase is being called the ‘Residential Nil Rate Band’ (RNRB) and will be introduced slowly over a period of 5 years from April 2017 to 2021 (from £100,000 to £175,000).
Furthermore, only those with residential properties or those who once owned residential properties will be eligible to apply the RNRB to their estate. More complexities are drafted within legislation and will naturally confuse lay persons if they do not receive the correct advice. For example, did you know that your estate will only benefit from the RNRB if your direct decedents are beneficiaries.
Essentially, those with no property or those who have no children or do not want their children to benefit will not be able to apply the RNRB to their estates.
We at Pindoria Solicitors are advising our clients of the contents of RNRB and how it will work in practice. All of our Will client’s receive a preliminary assessment to determine whether their estate will be eligible for application of the RNRB.